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Role and Significance of Budgetary Control


Enterprise is a intricate man-made jogging coupling system and a contractual connection with body; it's very necessary to the business enterprise activities of its process and implements control. According to the modern management expert Robert Simon's theory, management control achieve management goals. Through the execution of a series of management control lever, so that it should raise the need for budgetary control and devote energies to the management of budgetary control to ensure that business targets and performance management of the clean realization.

The essay will first give a synopsis of budget control. Second, it will present the Performance Management Overview. Thirdly, it will discuss How exactly to improve the performance of budgetary control. Finally, it'll give a brief conclusion.

An summary of budget control

The meaning of budgetary control

Budgetary control gets the existence of broad and slim sense. Wide budgetary control sees the complete budget system as a control system, which it is the formation of a prior, during and after the whole process control system (David E. W. Marginsona, 1999). Through the budget preparation, budget evaluation, praise and punishment by monitoring of budget execution. Filter budgetary control prepares a good budget as a basis for performance management and benchmarks on a regular basis to compare genuine performance with the budget analyze distinctions in the results and take corrective steps, which is mainly referring to something in the process of budget implementation in the monitoring of action.

According to control activities, budget control includes focus on control, process control and system control, while the budget as the principal means of corporate internal controls offers a comprehensive management platform. Budget goal of control is that Budget management through strategic likely to determine the total annual business objectives; then through the decomposition of signals to clarify the responsibility of the objectives of the duty of the budget models as a basis for evaluation.

Budget program control is the fact Budget management achieves complete control over the reason through the department of budget management decision-making specialist and authorization control buttons, segregation of responsibilities control is incompatible with the budget company, budget, audit, budget monitoring and inside audit characteristics (John K. Christiansen and Peter Skrbk, 1997). Budgetary control regulates businesses and people's action through some system control and enhances enterprise "rule of law" capacity, at the same time increases the enterprise's core competitiveness.

Budgetary control is the central of organization management control and an enterprise management system, a very important control system. Budgetary control is a thorough system of budgetary control, That budgetary control infiltrates to the many business processes of enterprises. At exactly the same time, it is still the primary of interior control. Research and the implementation of budgetary control is an important warranty for the effective implementation of budget management

The role and need for budgetary control

Budgetary control mainly identifies the budget during the execution of the budget execution of the usual guidance and control; it's the budget target to achieve the necessary warranties. Control functions will be the basic functions of management of the budget in the research of the implementation of organization budget management; Control effect of budget management throughout the management process.

Budgeting is a pre-budget control, budget execution is a matter of control, budget evaluation is some sort of former mate post control. As the enterprise's own inside and external conditions change, sometimes business strategy need to make related adjustments, though corporate and business budget management must change in accordance with the strategic objectives of changes in the future management of functional activities to attain feed forward control (Peter Brownell, 1985). In the budget execution process, from budget management, budgetary control organizations in the field and promptly found out that the actual deviations from the budget distinctions, and took the necessary measures to get rid of weaknesses and achieve process control.

Budget management functions In the budget- opinions control, budget management, budget management and the execution of the key functions keep carefully the actual results to compare with budget targets with time, and deviations occur message to budget management and the main body so that adjust it timely to guarantee the budget goals.

In short, the progress control focuses on the corporate budget management and budgeting. Things along the way control focuses on each connect to control the implementation of the business, and after, feedback control focuses on the feedback regarding to deviate from the budget aim for follow-up control of information. Due to the combo, only the budget to bolster all-round management and control capacities, it enables Enterprise's strategic targets to be processed to use.

Budgetary control isn't only a variety of control, but also a complete range of control; budget control must permeate to the organization in every business operations and the business enterprise links, which is covering all business areas and positions. On the one hand, the use of accounting dimension accounting methods indicate implementation of the budget process and oversight for accounting control and budget management for the essential values to supply the required information. On the other hand, in-depth into the origin of the worthiness of management activities, the daily procedures of specific business areas, such as procurement, production, sales and so on, to carry out management control. Organization Budget Management of the main needs of the accounting team and co-ordination between sections and communication bill control and management control jointly.

Budget management includes many factors, the breadth of your choice of the plank of directors and the boards of supervisors only grasp what is important to be able to take into account the entire situation, but also made a decision to encourage the execution of the budget, the primary body of self-control is specially necessary.

Performance Management Overview

Performance Management connotation

"Performance management" is developed on the basis of a management theory and management models in the original management ideas (David Otleya, 1999). Performance management objectives promote the in charge people accountable for results to achieve organizational patterns efficient; it might through the look of organizational activities and achieves the target evaluation of the consequences.

Compared with traditional management, performance management activities of the business is advocating relaxation of process management and guidelines of control, the management concentrate from a rules-based accountability to performance-based accountability, the whole management process demonstrates the actions of the business goals and achieve its objectives effectiveness concerns. We must establish a performance-based accountability, it is necessary for organizations and people to evaluate the performance of activities which lead to the activities of the business and individual performance analysis.

By designing a set of performance evaluation index system of scientific, it represent the aims of organizations and people to achieve results, and it provide a basis for motivation and restraint and the allocation of resources for managers Performance appraisal is an important technology tool for performance management that improve the efficiency and it is the key factors of organizational action, thus constitute the primary content of performance management

An overview of Performance Budgeting

The performance management concepts for budget management techniques produced a performance budgeting. Based on the Ministry of Fund Budget Division of the definition of performance budgeting, performance budgeting is a goal-oriented budget, it is dependant on success of the government's general population sector objectives and it is in budget prep, control and evaluation of the budget management model( Robert Dransfield, 2000).

In compare with the original budget management, performance budget, centers the effectiveness of fiscal spending in the tensions, at the same time it advocated to give managers sufficient autonomy in budget management and reporting system through the general public sector, general public sector confirming system in the traditional budget system to inject a types of incentive and restraint mechanisms to effectively add the organizational goals.

In the performance budget management, budget expenses performance evaluation as a management control tool, which is a central content in performance budget management. The so-called budget expenditure performance evaluation refers to the utilization of certain examination methods, quantitative indications and appraisal conditions and functions of the team to attain its performance goals established by the realization of the degree, as well as to accomplish that goal; the execution of the budget was completed by the results of a thorough assessment and evaluation.

The aim of the team of performance aims is logical allocation of resources, optimizing effectiveness and efficiency of the use of budgetary funds through a thorough evaluation. Performance evaluation of methodical conclusions of the performance of expenses is the key to the successful implementation of performance management. This pertains to how to organize the implementation, how to choose the opportunity of evaluation, how to determine the performance objectives, performance signals and evaluation methods and so forth; in order to acquire one scientific summary question on general public costs in the "economic", "efficiency" and "effectiveness "of the Three.

From this is of performance budgeting, performance budget has two core elements, some may be performance evaluation to solve how to create performance evaluation system of technology to reach at the performance of scientific information; second is performance information and budget integration to solve performance information (PI) how to incorporate of management and budget issues, which is how to combine the performance information and budget planning, execution and confirming system in order to achieve the efficient budget management and the advertising of organizational performance improvement (Jack Diamond, 2003). Both of these two aspects are interlinked and mutually distinction, which constitute a complete performance of the budget system.

How to increase the success of budgetary control

Sometimes, the implementation of the budget alone to assess an enterprise operation in the time may be good or bad business lacks versatility, and thus generate businesses to focus only on some short-term, and immediate interests, somewhat than from a long-term, tactical perspective thinking. Therefore, we have to budget for the original appraisal solutions to do some improvements and make control tools with various other combine, so as to achieve the ideal.

Drawing on healthy scorecard thinking

Balanced scorecard help us from the level of multi-dimensional performance of the built-in assessment managers, it both on the organization's financial indicators for analysis and the organization's customers, internal operations, the learning and growth aspects of assessment.

Incentive and constraint system to conduct innovation

Budgetary control get visitors to complete it, they have to consider people's tendencies and psychological factors, therefore the incentive and restrictive system in the budget management is most importance (Michel J. Lebasa, 1995). Companies should be based on objective circumstances to build up a series of truly value-creating linkages with the personnel of the motivation and restraint mechanisms to fully and effectively mobilize the enthusiasm of staff performance and imagination, so that employees consciously enterprise business targets into their own development to be performed goals, and positively take the effort to complete the business plan to develop a budget, so the budget management companies could become more energetic and effective execution.

Dynamic evaluation

Dynamic evaluation refers to the budget implementation process, the budget of the execution of active and tracking of analysis of the budget in the execution, the timely diagnosis of the budget in the implementation of the problems found and digesting and modification of the budget with time. Through dynamic evaluation, we can more well-timed control the budget management and ensure its effective implementation.


Some companies focus only on functional planning of the budget and disregard the control of the budget implementation process. Actually, the control of budget management play an integral role in the budget; when there is no budget control, the budget will be a mere formality lose control. Budget management control system is used by various authorities departments and budget execution of the relevant group of internal control methods and the modification device, whose main function prevent mistakes and fraud to guarantee the correct execution of the budget, as well as the efficient realization of organizational goals. Budget management and budgetary control systems also known as the internal control system, which constitute a whole budget control system together with the budget and external control systems.

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